How Even Millennials Can Retire (with Benjamin Brandt)

Summary

In this episode, Anthony welcomes Benjamin Brandt to the show. Benjamin is a Certified Financial Planner and the Founder/President of Capital City Wealth Management, a Bismarck, North Dakota fee-only financial planning company. Listen Ben educates with his tips and as he answers questions on retirement for millennials.

Link and Resources

Contact

Call or text 212-401-2990 if you’d like to work with Anthony (or any of our guests).

Full Transcript

ANTHONY: Over 80% of millennials have almost no savings at all. That’s a scary statistic, and that’s why I’m here talking with Benjamin Brandt about how millennials should approach their retirement. Hey Benjamin.

BENJAMIN: Hey, how’s it going? Happy to be on the show.

ANTHONY: Thanks for coming on. Benjamin, I’ve asked you to come on and talk about retirement planning for millennial men, and I think it sounds like you have an interesting take on that because, if I have it correct, you are also a millennial, is that right?

BENJAMIN: That’s right, I’m the world’s oldest millennial, I was born in September of 1981.

ANTHONY: Is that the cutoff line?

BENJAMIN: I think so, every millennial list I read I’m on half and off the other half, some say 1983, some say 1981, so I figure if I’m on the cutoff I must be the oldest one.

ANTHONY: Now, to be clear, your bread-and-butter business is advising and helping folks who are already in retirement, which would mostly be baby boomers, is that correct?

BENJAMIN: That’s right, and I also create content, record podcasts and write blogs, about living off of your savings. That’s 100% of my focus, I am one mile wide and 10 miles deep with my advice.

ANTHONY: So you don’t have an incentive to try to, you’re not selling to millennials, this advice is purely the best advice that you can give just from a purely objective perspective, is that right?

BENJAMIN: Yeah, we get calls from younger investors all the time, I’m happy to spend a minute or two with them, but then I refer them on to my other financial advisor friends that focus just on younger people investing, because they have totally different needs than someone that is 62 and looking to live off their savings. So I love talking financial advising, love talking to young people about it, but never take them on as a client.

ANTHONY: I feel like you and I are kindred spirits in that way, in that the folks listening may know this, I’m a professional executor, meaning I help families wind up the final affairs after someone’s passed away. So I do have that sort of end game perspective when folks have questions about how to do their planning, and it feels like you kind of have that as well. You’re helping folks who are in retirement now so that any advice you give to folks who are starting to plan for their retirement, you kind of have that I-can-see-into-the-future kind of vibe going on, yeah?

BENJAMIN: Yeah, I can help you shorten your learning curve.

ANTHONY: So let’s get right to it. What would be your top tips for young male millennials with regard to retirement planning?

BENJAMIN: I think the biggest tip that I can give, and it doesn’t come from some dusty financial planning tome, it just becomes from me and learning from my own mistakes. When I was younger and just starting a family, just starting a career, just starting kids, I was a huge Dave Ramsey fan, I still am a Dave Ramsey fan. But I would focus a lot of my effort, and you can only burn a calorie once, so any misguided effort is sort of working against yourself. But I would focus all my effort on I want to trim my budget, I want to live more frugally, I want to cut expenses here, cut expenses there, save money here, save money there. Because you can only burn a calorie once, don’t focus too much on cutting expenses. Focus more on the thing that’s gonna benefit you for the next 20 or 30 or 40 years, and that’s increasing your income, increasing your ability to earn income, increasing your side hustles, increasing other avenues or other verticals that you could make money. So if you can only spend a calorie once, spend it on making more money rather than cutting lifestyle expenses. That doesn’t mean go on some crazy vacation every month, that just means expand your ability to earn income and a lot of those other pieces might fall into place.

ANTHONY: I completely agree. There seems to be a wave of, I guess they call them minimalists or frugalists, I’m not sure what the exact term is, but just make more. I mean, there’s so many ways to, I don’t want to be flippant about it, it’s not that easy, but in this online atmosphere and this increasingly connected world, there are so many opportunities out there, there are so many earning potentials out there, why limit yourself? And it seems like millennials do, in fact, want to enjoy their lives. Just earn it, that’s all.

BENJAMIN: Absolutely enjoy your life. Craft for yourself, and I talk about this on my podcast all the time, craft for yourself a lifestyle that you don’t ever feel the need to retire from. You know, those minimalists that you mentioned, they run alongside with that FIRE crowd, financial independence retire early. I don’t ever see myself retiring. I love recording my show, I love meeting with clients. I’m not, to quote Caddyshack, I’m not ditch digging over here, I’m working between my ears. I could do this until I’m 95 years old. I’m having fun every day at the office. I’m just trying to create a lifestyle for myself that I don’t ever need to retire from.

ANTHONY: That’s a fantastic attitude, I wish I could can that and pass that on to all my younger friends.

BENJAMIN: That’s what I tell, even my clients that are in their 50s that are approaching retirement, I say, if you’re a couple years from retirement start thinking about some sort of a lifestyle that you could create, whether that’s in consulting or whether that’s charity work, you have to dedicate yourself to something, you have to retire to something rather than retiring from something, and create that in your lifestyle then you’ll never, you’ll feel useful your entire life and that’s gonna keep you feeling young.

ANTHONY: Great stuff, I mean, you and I are on the exact same page there. But let’s jump into some of the really, really basics that you and I may take for granted that some of our younger brothers may not quite understand or not have wrapped their heads around yet. One of the real basic planks of any retirement plan has got to be your qualified accounts, right? We’re talking 401-Ks and IRAs. And I’m seeing here, I want to throw a stat at you, that 66% of millennials have zero, zero dollars, in their retirement accounts. I mean that’s just–

BENJAMIN: Unacceptable.

ANTHONY: Totally, can you talk on that a little bit?

BENJAMIN: You know, the majority of the 401-K plans, including the one we just set up here at the office, you’re getting a match on the money that you put in. So that’s like somebody hiring you for $12 an hour and you say, “No, you know what, I’m good at 11, “I’m just gonna work for less voluntarily, “and I’m not gonna take the entire compensation package “that you’re giving me.” To quote Dave Ramsey, if you can’t save 1% of your income, if you’re not making it on 100%, you’re still not gonna make it on 99%. So 1% isn’t gonna hurt you. Start at 1%, increase it every three months or something, or every time you get a raise, or whatever your version of that is. Start with something, it’s better than nothing, and then just increase it over time. You’ve got to get the company match, that’s insane.

ANTHONY: I’m gonna throw one of the common objections at you is that the millennial generation, only about a third of them are 401-K eligible because of the companies they work for or the work arrangements they have, whether it’s part-time or freelancing. So what do you have to say to folks who say, “Oh, I don’t have a 401-K at my company?”

BENJAMIN: Then there’s a small road block in your way but it’s easily surmountable and you can do it with maybe 15 minutes of work. You go online to Betterment or any of these online robo-advisors and you set up a Roth IRA and you just have them zap out, the minimum is probably $25 a month, maybe it’s $50, but have them zap that right out of your checking account every month. So you just create the automation that your company would have created by zapping it out of your paycheck. So rather than automating it and zapping it out of your paycheck, pulling it out of your payroll so that you don’t even see it, there’s just one extra step, it hits your checking account and they zap it out of there. You don’t get the match, but what’s maybe even a little bit better long term is that that money grows for you tax-free in the Roth IRA. So there’s big benefits to both, but if you don’t have the 401-K you can have the Roth IRA. As long as your income isn’t crazy high, I’ll bet if you’re young and starting out in your career it’s likely not.

ANTHONY: So say I’m a younger guy and that’s my path, the Roth IRA. I believe this year the contribution limit is $5,500 per year, yeah?

BENJAMIN: Under 50, yeah.

ANTHONY: I mean I did the math, that’s $15 a day. I mean, just hop on Fiverr every day and do a task and you’ll be maxing out. Why is it so important to max out your qualified contributions? I think you mentioned this before, but let’s just really drive it home, yeah?

BENJAMIN: Well, I think it’s really important because I’ve talked to quite a few people in their 60s that are multi-multi-millionaires, extremely financially successful and extremely content with life, and when I interview them to become clients I often ask how young were you when you started saving? And most of them were in their late 20s-ish, mid-20s, early 30s, when they started their career. All of them have the same message, that I wish I would have started sooner. I mean people who started in-utero investing still wish they had started saving for retirement sooner. The reason that that’s so important is because compound interest is gonna do almost all of the heavy lifting when you’re saving for retirement. In fact, you’ll never be able to retire on that $15 a day. You’ll never be able to retire on the money that you save for retirement. The only way you’ll be able to retire is on the money that that money earns. That $15 a day is gonna turn into $90 a day 40 years from now when you’re ready to retire and ready to spend that money. So that’s the biggest thing is that you’ve got to start something, even if it’s something that’s very small, $25 a month. You’ve got to start it now because that compound interest is what’s really gonna save you. In fact, if you’re earning a 10% rate of return, which is difficult to do but it’s near the historical average if you’re gonna invest in all stocks, which most young people probably should do, you’re gonna double your money every seven years. So that’s the difference between starting out at 23 versus starting out at 30, you’ve got one doubling cycle if you can start just that little bit earlier. I think that’s crucial when it comes to saving up as much as we’re gonna need to be able to retire and not have an earned income and just live off our savings completely. It’s something I’ve got a lot of experience with.

ANTHONY: You’re touching on something that I want to jump in on. First of all, Benjamin has a really, really great podcast of his own called the Retirement Starts Today show, is that right?

BENJAMIN: Yep.

ANTHONY: And I was listening to it, and you had a great episode just a few clicks back called, I think it was, The One Million Dollar 401-K. I may be getting that title a little bit wrong but that’s the concept, yeah?

BENJAMIN: Yeah, that’s one of our most popular episodes, I think it had a very clickable title.

ANTHONY: Oh yeah, for sure. And you just touched on that first, or I think it was the five ways to get a million dollar 401-K, and you just touched on the first one, start saving early. Can we go over a couple of the other ones, and if you don’t remember I can prompt you here a little bit. For example, you mention the minimum contribution you should be throwing into your qualified plan, or your 401-K.

BENJAMIN: If I remember correctly, I think what started the idea for that specific episode was that Fidelity did an interview, they did sort of a poll. They had something like a few hundred thousand people that had at least a million dollars in their 401-K, that would be employer-sponsored plan. They surveyed these people, and these are like the five through points that everybody that had at least a million in their 401-K said these five things were, in every single instance of someone that had at least a million dollars in their 401-K. So it would stand to reason that if we do all five of those things consistently, then eventually we will have those results, right?

ANTHONY: I mean that just sounds awesome, to retire with a million dollars in your tax-qualified plan. So I just want to have a little game with you, Benjamin. What’s the biggest qualified plan you’ve seen? And I can share mine as well.

BENJAMIN: About three million bucks.

ANTHONY: I think I have you there. I had a lady who retired from AT&T, I think she had, I think it may have been 35 or 40 years of service. Her IRA was $10 million.

BENJAMIN: That’s got to be company stock, right? Because that would be a hard number to hit with maximum contributions being so low as they were many years ago.

ANTHONY: You know, I wasn’t there, I wasn’t the estate planner. It sort of came to me. I think she rolled her pension into her IRA, does that make sense?

BENJAMIN: Yep, that happens here, too, yep. And that’s kind of a creature of ultra-low interest rates. Maybe this isn’t for your audience exactly, but the lower the interest rate, the higher the lump-sum payout on pensions are. That’s why just about everybody’s rolling out their pensions into a lump-sum IRA these days, just because ultra-low interest rates means when your company has to buy you out to an insurance company, let’s say they owe you $30,000 a year for the rest of your life. The lower the interest rate, the higher that lump sum payment is because they have to go buy an immediate annuity from an insurance company. Maybe that’s a bit of inside baseball, but that’s why you’re seeing a lot of it these days.

ANTHONY: This might still be going over folks’ heads, especially our young millennial men. So if they were to go seek out professional advice, I’m constantly writing that they should seek out fee-only and/or flat fee advice, and that’s really what you seem to be doing and I’d love to hear about how you go about charging your fees.

BENJAMIN: We charge on assets under management, which I don’t think is a good fit for young people but I think it’s a good fit for older people because when people hire us for our services what they’re buying is they’re buying hand-holding. They’re buying my time and my team’s time that we’re gonna walk the journey of retirement with them. We’re gonna help them decide when to collect Social Security, we’re gonna vet for them different health insurance plans, we’re going to counsel them on what is a sustainable withdrawal rate from their investments. So the investments is the plan, often times, when we’re dealing with living off of our savings. That’s in stark contrast to a younger investor and what they need. They need guidance on their student loans, and how do we structure those plans? That has nothing to do with your assets. Or maybe they need help negotiating a pay raise, or maybe they need help shopping their resume with a headhunter to another company. Nothing at all to do with their assets. So I’ll give you a number one resource that I refer my young clients to, and that’s the XY Planning Network, X-Y-P-N. You can search them online, they’re on Facebook, they’re on every social media. That’s this network of generally younger advisors, they’re going to be certified financial planners, they’re going to be fee-only. You can search them geographically, but all of them would be able to meet with you virtually, and they’re going to at least have the option of either hiring them for a fee-for-service, meaning you pay them $500 or $5,000 or whatever their fee is for a plan; or you’re going to be able to hire them on a retainer basis, meaning you pay them $100 or $200 a month, just like your Netflix subscription or your gym membership. Then you get ongoing access to them as an advisor. So it’s really more about counseling you through life’s events over portfolio management because you have a lot of life events when you’re young, when you’re in your 20s and 30s and making a family and starting your career and all that stuff, having kids. Versus when you need portfolio management when you’re 66 and you’ve got $3 million and you want to know how do I make this a paycheck on a monthly basis until I’m 102?

ANTHONY: You are a certified financial planner. Can you help these younger folks understand what all these designations mean, and what they should be looking for if they’re looking for guidance as you just described, on a younger man trying to figure out how to sort of set up the architecture of his retirement plan?

BENJAMIN: You’re looking for one of the three big Cs. A certified financial planner is someone that’s going to help you craft that financial plan and stick with it, provides some accountability likely, and they’re going to know the ins and outs of what your 401-K does, what sort of life insurance you need. There’s six main curriculum that they’re going to master. Also to be a CFP you need a four-year degree, you need at least three years of client-facing experience. So there’s gonna be certain minimum requirements to have that designation that are gonna be valuable for a young person, but really anybody that’s looking to hire an advisor. The next big C is the CFA, that’s chartered financial analyst. That’s gonna be the person that’s kind of creating what you invest in, the mutual funds and ETFs generally speaking. They’re probably not gonna be meeting with clients directly, so CFP is probably still the best bet. And then CPA is the other big C, certified public accountant. They’re gonna help you file your taxes and do all those sorts of things. So anybody that has one of those three Cs, probably still leaning towards CFP and then many CFPs go get a CPA or a CFA. They’re gonna be well-equipped to help you answer those questions.

ANTHONY: Benjamin, you really covered very succinctly and very nicely all the points I wanted to cover. Where can folks find you and learn more from you? We already mentioned your great podcast. How else can they look you up?

BENJAMIN: Yeah, we live on iTunes, we live on Stitcher, we live on any podcast universe that you want to. We publish episodes on the first and 15th just like payday, potentially going weekly next year, we’ll see what happens. I’m also hanging out at the Financial Bloggers Conference the third week in September if you want to come say hi to me in Orlando, if any of your listeners are also financial bloggers and podcasters.

ANTHONY: Orlando sounds tempting.

BENJAMIN: Yeah, I pretty much live in the podcast world. I try to do some YouTube and things like that, but podcasting seems to be more of my jam.

ANTHONY: I’m with you, I threw up a few videos and let’s just say podcasting was more flattering to me.

BENJAMIN: There use to be a saying, you’ve got a face for radio, I think that is helping me out in the podcast world.

ANTHONY: Hey Benjamin, thanks again so much for jumping on. Is there anything else you’d like to add before we sign off?

BENJAMIN: Anthony, I loved chatting with you and I would encourage all of your listeners to get started early and let compound interest do all the heavy lifting.

ANTHONY: Thanks so much. Everyone listening, don’t forget to go to AnthonySPark.com to join the email list and hit subscribe in iTunes, Google, or Stitcher. Alright, talk to you again next time, bye.